Economy Watch: President Devotes Most of State of the Union to the Economy

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As expected, President Obama laid out numerous elements of his economic program in Tuesday's State of the Union address, along with campaign-style dollops of criticism for Congress.

By Dees Stribling, Contributing Editor

As expected, President Obama laid out numerous elements of his economic program in Tuesday’s State of the Union address, along with campaign-style dollops of criticism for Congress—implicitly, the House’s Republican majority. Also as expected, the Republicans shot back at the president, some of them (such as House Speaker John Boehner and presidential candidate Mitt Romney) not bothering to wait until the president actually spoke, in a practice called making “prebuttals.” Such is the agitated political environment of an election year.

Most of the president’s speech did, in fact, focus on the economy, an “economy built to last,” as the chief executive put it. The president made his way through ideas and proposals about manufacturing, education and energy, along the way making mention of such recovery as the U.S. economy has made, such as the statistic that “in the last 22 months, businesses have created more than three million jobs.” Probably all too aware of the way economic green shoots of 2010 and 2011 withered after only a few months, the president didn’t belabor recent improvements in the economy.

Unsurprisingly, when on the subject of tax policy, the president explicitly called for the “Buffet rule”—no one like Warren Buffet should pay income tax at a lower rate than Buffet’s secretary—a point emphasized by the fact that Buffet’s secretary was sitting near First Lady Michelle Obama. “Right now, Warren Buffet pays a lower tax rate than his secretary,” the president noted, then proceeded to ask rhetorical questions: “Do we want to keep these tax cuts for the wealthiest Americans? Or do we want to keep our investments in everything else–like education and medical research; a strong military and care for our veterans? Because if we’re serious about paying down our debt, we can’t do both.”

The president made it clear how he would answer such rhetorical questions, and it wasn’t long before the Republican Party reaffirmed its opposing answer. Speaking for the party in the official rebuttal to the president’s speech (as opposed to those prebuttals), Gov. Mitch Daniels of Indiana said, “It’s absolutely so that everyone should contribute to our national recovery, including of course the most affluent among us. There are smart ways and dumb ways to do this: the dumb way is to raise rates in a broken, grossly complex tax system, choking off growth without bringing in the revenues we need to meet our debts.”

Regarding real estate, President Obama said that he would send Congress a plan that “gives every responsible homeowner the chance to save about $3,000 a year on their mortgage, by refinancing at historically low interest rates.” There has been talk of such plans for some time, especially ones to allow FHA-guaranteed mortgages to be refinanced even for under water homeowners, though it isn’t clear yet exactly what the president has in mind—maybe a plan that would allow any current mortgage holder to refinance. Now that he’s mentioned a refinance plan so prominently, however, the details will likely be known soon.

BLS reports that state unemployment rates inch down

The Bureau of Labor Statistics reported on Tuesday that in December, 37 states and the District of Columbia recorded unemployment rate decreases, three states posted rate increases, and 10 states had no rate change, when compared with November. When compared with December 2010, fully 46 states saw their unemployment rates decline, while four and DC experienced increases.

The largest over-the-month increase in employment occurred in Texas (up 20,200 jobs), followed by Indiana (up 15,100) and California (up 10,700), though those are two large and one mid-sized state, so the changes didn’t make huge dents in their unemployment rates. South Dakota, which never really had a recession in terms of mass unemployment, gained the most jobs in percentage terms in December, up 1.1 percent, due mostly to the shale oil boom. Likewise North Dakota experienced a December jobs bump, up 0.9 percent.

In fact, North Dakota saw the largest year-over-year jobs increase between December 2010 and December 2011, up 5.7 percent, according to the BLS. The largest year-over-year percentage decrease in employment occurred in Delaware (down 0.7 percent), followed by Alaska (down 0.5 percent) and Georgia (down 0.4 percent).

Wall Street was indecisive once again on Tuesday, reportedly worried about the painfully slow progress in negotiations between Greece and its creditors. The Dow Jones Industrial Average lost 33.07 points, or 0.26 percent, while the S&P 500 was down 0.1 percent. The Nasdaq eked out a 0.9 percent gain.

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